Exhibit 10.27
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made as of the 1st day
of April, 1998, by and between XXXXXXXX INDUSTRIES, INC., a Virginia corporation
("SII"), XXXXXXXX ADHESIVES, INC., a Virginia corporation ("SAI"), the mailing
address for both of which is 000 Xxxx Xxxx Xxxxxx, X.X. Xxx 0, Xxxxxxx, Xxxxxxxx
00000 (together hereafter referred to as "Employer"), and XXXXXXX X. XXXXXXX, a
Virginia resident ("Employee"), currently residing at 00000 Xxxxxxxxxx Xxxx,
Xxxxxxx, Xxxxxxxx 00000.
AGREEMENT:
In consideration of the mutual agreements contained herein, the
sufficiency and adequacy of which are acknowledged, the parties agree as
follows:
1. Employment. Employer hereby employs Employee, and Employee
hereby accepts employment by Employer, as the Chairman of the Board and Chief
Executive Officer of Employer. As Chairman of the Board and Chief Executive
Officer, Employee will faithfully perform such duties as may reasonably be
assigned to him by the Board of Directors of Employer from time to time.
Employee will devote his best efforts and substantially all of his time,
knowledge and ability to advance the business of Employer, and will not engage
in any conduct that reasonably may be expected to have any adverse effect upon
Employer.
2. Compensation. During the term of Employee's employment
hereunder, Employee shall receive as full compensation for all duties performed
by him on Employer's behalf:
A. Base Compensation. An annual salary of one hundred ninety
thousand dollars ($190,000) payable in equal installments not less than monthly,
subject to any annual adjustments as may be made by Employer from time to time.
B. Bonuses. Employer and Employee agree that Employee shall
be eligible for additional compensation in the form of bonuses based upon the
value of Employee's work contributions to Employer and the performance of
Employer in the marketplace - in the event Employer establishes a bonus plan or
program.
C. Stock Options. Employee shall be entitled to participate
in and shall receive the benefit of any existing stock option plans of Employee
or of any stock option plans created during the term of this Agreement which
benefit other executive employees.
D. Company Vehicle. Employer shall provide to Employee, as
additional compensation, a suitable vehicle for Employee's use. Employer shall
solely be responsible for any and all costs associated with maintaining,
insuring and registering said vehicle.
E. Retirement. Employee shall be entitled to participate in
and shall receive the benefit of any existing group retirement plans of Employer
or of any retirement plans created during the term of this Agreement which
benefit other executive employees generally.
F. Fringe Benefits. Employer shall procure comprehensive
health and dental insurance for Employee and Employee's spouse and disability
insurance for Employee under one or more policies of insurance comparable to the
best existing policies by which Employer insures its other executive employees.
G. Vacation and Holidays. Employee shall be entitled to four
(4) weeks of paid annual vacation. Employee may accrue vacation, in whole or in
part, from year to year. Employee shall also receive such holidays as Employer
provides its other executive employees.
3. Term. This Agreement shall last for an initial term of three (3)
years commencing on April 1, 1998 and ending on March 31, 2001, at which time it
shall automatically renew for successive one (1) year periods unless sooner
terminated in accordance with the provisions hereof or either party gives the
other written notice of its election not to renew the Agreement at least ninety
(90) days before any renewal date.
4. Termination. This Agreement may be terminated as follows:
A. By Employer Without Cause. The Board of Directors of
Employer may terminate Employee's employment at any time without Cause (as
defined herein) before a Change in Control (as defined in Section 5 below) or at
any time 240 days after a Change in Control, upon not less than fifteen (15)
days advance written notice. In such event, Employee shall be paid the salary
set forth in subsection 2A through the earlier of the last date of the remaining
term of this Agreement, the date of his death, or the date eighteen (18) months
after the termination of his employment.
B. By Employer With Cause. The Board of Directors of the
Employer may, by resolution, terminate the employment of Employee at any time
with Cause; provided, however, Employee shall be entitled to fifteen (15) days
advance written notice before any such proposed resolution may be acted upon and
Employee shall further be entitled to attend any such Board of Directors meeting
and to hear and respond to any and all evidence which the Board of Directors
considers before adopting any such resolution. For purposes of this Section 4,
"Cause" shall be defined as:
(i) Gross incompetence, gross negligence, willful
misconduct in office, breach of a material fiduciary duty or
commission of any fraud or serious dishonest act detrimentally
affecting Employer in Employer's business relations (as
reasonably determined by the Board of Directors;
(ii) Willful and knowing violation of any statute
governing either Employer's business or Employee's conduct as
Employer's employee or conviction
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of a felony crime or commission of an act of embezzlement or
fraud against Employer (as reasonably determined by the Board of
Directors);
(iii) Employee's mental or physical disablement
resulting in Employee's inability to fulfill the terms of this
Agreement (as reasonably determined by the Board of Directors);
(iv) Any material breach by Employee of a material term
of this Agreement;
(v) The entry of a decree or order by a court of
competent jurisdiction (a) judging Employer as bankrupt or
insolvent, (b) approving as properly filed a petition seeking
reorganization, arrangement, adjustment or composition of or in
respect of Employer under any applicable law, (c) appointing a
receiver, liquidator, assignee, trustee, sequestrator (or other
similar official of Employer), or (d) ordering the winding up or
liquidation of the affairs of Employer; or
(vi) The death of Employee.
In the event of termination with Cause, Employee shall be entitled to no further
compensation or benefits under this Agreement.
C. By Employee Without Good Reason. Employee may terminate
his employment without Good Reason, as hereafter defined. If Employee terminates
his employment without Good Reason, he shall be entitled to no further
compensation or benefits under this Agreement[, and, in the event such
termination is during the initial term of this Agreement, he shall forfeit any
right to exercise any unexpired incentive stock option awarded during such
term].
D. By Employee With Good Reason. Employee may terminate his
employment with Employee at any time with Good Reason. In the event Employee
terminates his employment with Good Reason, he shall be paid his salary as set
forth in subsection 2A through the earlier of the last day of the remaining term
of this Agreement, the date of his death, or the expiration of twelve (12)
months from the date of the termination of his employment. He shall not be
required to render any further services to Employer. For purposes of this
Section 4, "Good Reason" is defined as:
(i) The assignment to Employee by the Board of
Directors of duties materially inconsistent with and inferior to
the position, duties, responsibilities and status of the Chief
Executive Officer of Employer, except in connection with the
termination of his employment for Cause; or
(ii) Any material breach by Employer of any material
term of this Agreement, which is not remedied within fifteen
(15) days of written notice to the Board of Directors by
Employee.
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5. Change in Control.
A. Definition - Change in Control. "Change in Control" means
consummation prior to March 31, 2001 of:
(i) A reorganization, merger, consolidation or other
event, with respect to which the individuals and entities who
were the respective beneficial owners of the common stock and
voting securities of SII immediately prior to such
reorganization, merger or consolidation do not, following such
reorganization, merger or consolidation, beneficially own,
directly or indirectly, more than 50% of, respectively, the then
outstanding shares of common stock and the combined voting power
of the then outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of
Employer resulting from such reorganization, merger or
consolidation;
(ii) A complete liquidation or dissolution of Employer;
or
(iii) A change in the composition of the Board of
Directors of SII such that the individuals who, as of the date
hereof, constitute the Board of Directors of SII (the Board of
Directors as of such date hereinafter being referred to as the
"Incumbent Board") cease for any reason to constitute at least a
majority of the Board of Directors; provided, however, for
purposes of this Section, that any individual who becomes a
member of the Board of Directors subsequent to the date hereof
whose election, or nomination for election by the Company's
shareholders, was approved by a vote of at least a majority of
those individuals who are members of the Board of Directors and
who are also members of the Incumbent Board (or deemed to be
such pursuant to this proviso) shall be considered as though
such individual were a member of the Incumbent Board; but,
provided further that any such individual whose initial
assumption of office occurs as a result of either an actual or
threatened election contest (as such terms are used in Rule
14A-11 of Regulation 14A promulgated under the Securities
Exchange Act of 1934) or other actual threats of solicitation of
proxies or consents by or on behalf of a person other than the
Board of Directors shall not be so considered as a member of the
Incumbent Board.
B. Definition - Total Compensation. "Total Compensation"
means Employee's W-2 compensation for federal tax purposes, health care benefits
and automobile allowance, if any, for the calendar year immediately preceding or
coinciding with a Change of Control.
C. Employment Termination Option. In event of a Change in
Control of Employer, Employee shall, during the period between 60 and 240 days
after the Change in Control event, have the option to terminate his employment
with Employer by delivering written notice of his election to so terminate his
employment hereunder. Such termination shall be considered for all purposes
under this Agreement as a termination with Good Reason provided,
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however, Employee shall be entitled to receive a lump sum payment in cash within
thirty (30) days of the date of termination of employment of an amount equal to
one and one half times Total Compensation.
D. No Excess Parachute Payments. It is the intention of the
parties that payments to be made to the Employee pursuant to this Agreement
shall not constitute "excess parachute payments" within the meaning of Section
280G of the Internal Revenue Code of 1986, as amended and any regulations issued
thereunder. If the Employer or independent accountant serving as auditor for the
Employer, as the case may be, on the date of the Change of Control determines
that some or all of the payments scheduled under this Agreement, as well as any
other payments determined to be contingent on a Control of Control, would be
non-deductible by the Employer under Section 280G, then payments scheduled under
this Agreement shall be reduced to the maximum amount which may be paid without
causing such payments to be non-deductible, less $1. In making such
determination, the Employer or the Employer's accountant may rely upon interim
or proposed regulations interpreting Section 280G. Employee, at his own expense,
may obtain an independent determination. If a difference of opinion exists with
respect to whether there are excess parachute payments, then a further opinion
may be requested by Employer and Employee, selecting an accountant that is
acceptable to both. The determination by the jointly selected accountant shall
be binding on both parties.
6. Rights to Work Product. Employee agrees that Employer will have
an exclusive right to all products, ideas, inventions, or other works that are
conceived, developed, improved or supplemented by Employee during the period of
his employment with Employer, whether during or outside of Employee's working
hours, which are within the scope of, or related to, any of Employer's
activities or operations, or any of Employee's duties, responsibilities or
activities as an employee. Employee agrees to take at Employer's expense, but
without additional remuneration to him (except as Employer may, in its sole
discretion, grant), any action required by Employer to patent, copyright,
license or otherwise protect Employer's rights and interests in such products,
ideas, inventions or other work.
7. Trade Secrets and Confidential Information. During the term of
this Agreement, Employee will continue to have access to various trade secrets
and confidential information of Employer. Employee acknowledges that such
confidential information and trade secrets are owned and shall continue to be
owned solely by Employer. During the term of his employment and for five (5)
years after such employment terminates, Employee agrees not to use such
information for any purpose whatsoever or to divulge such information to any
person other than Employer or persons to whom Employer has given its written
consent unless Employee is compelled to disclose it by governmental or legal
process or by any provision of law or court order. In the event that Employee is
compelled to divulge such information as described in the previous sentence,
Employee shall give Employer at least five (5) days written notice prior to
divulging the information, unless such notification is prohibited by law.
8. Documents. Under no circumstances shall Employee remove from
Employer's office with intention to retain any of Employer's books, records,
documents, or customer lists, or any copies of such documents, without the
written permission of Employer; nor shall Employee
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make any copies of such books, records, documents, or customer lists for use and
retention outside of Employer's office except as specifically authorized in
writing by Employer.
9. Non-Competition. Employee agrees that during his employment with
Employer and for as long as he is receiving compensation under this Agreement,
he will not directly or indirectly, either as principal, agent, manager,
employee, partner, shareholder, director, officer, consultant or otherwise,
become associated with, employed by, or otherwise interested in, whether
financially or in any other capacity, any business operation directly competing
with Employer in any state east of the Mississippi River. This restriction shall
not preclude Employee from becoming the holder of any publicly traded stock,
provided Employee does not acquire a stock interest in excess of one percent
(1%).
10. Non-solicitation. Employee agrees that for a period of twelve
(12) months after his employment has terminated for any reason without the prior
written consent of the Board of Directors of Employer, or for so long as
Employee is receiving compensation from Employer, whichever period is longer:
A. Employee will not, directly or indirectly, solicit or
sell any of the products or services sold by Employer to any person, company,
firm, or corporation or entity who is or was a customer of Employer within two
(2) years prior to the termination of Employee's employment;
B. Employee will not solicit such customers on behalf of
himself or any other person, firm, company, or corporation; and
C. Employee will not, directly or indirectly, employ or
solicit the employment of any person employed by Employer within one (1) year
prior to such employment or solicitation. Further, Employee shall not induce,
solicit or advise any other person or business, or encourage or contribute to
the efforts of any other person or business, to employ or solicit the employment
of any person employed by Employer within one (1) year prior to such employment
or solicitation.
11. Ability to Earn Livelihood. Employee acknowledges that (i) in
the event his employment with Employer terminates for any reason, he will be
able to earn a livelihood without violating the foregoing restrictions; and (ii)
that his ability to earn a livelihood without violating such restrictions is a
material condition to his employment with Employer.
12. Remedies. Employee acknowledges that (i) compliance with
Sections 7, 8, 9, and 10 is necessary to protect the business and good-will of
Employer and (ii) a breach of any of those sections will irreparably and
continually damage Employer, for which money damages may not be adequate.
Therefore, the parties agree that in the event of such breach, Employer may seek
any and all legal or equitable relief available to it, specifically including
but not limited to injunctive relief, without the necessity of bond, and may
hold Employee liable for all damages, including actual and consequential
damages, costs and expenses, as well as legal costs and reasonable attorneys'
fees incurred by Employer as a result of such breach.
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13. Duration of Injunction. If Employee violates any of the terms of
Sections 7, 8, 9, or 10 and Employer consequently seeks injunctive relief from a
court, such injunctive relief may be applied prospectively to include the
duration of the covenant unexpired at the time of the first breach,
notwithstanding that the covenant may have otherwise expired at the time a
lawsuit is filed and/or at the time relief is granted.
14. Judicial Modification; Severability. The parties have attempted
to limit Employee's right to compete only to the extent necessary to protect
Employer from unfair competition. The parties recognize, however, that
reasonable people may differ in making such a determination. Consequently, the
parties hereby agree that, if the scope or enforceability of a restrictive
covenant set forth in Section 7, 8, 9 or 10 is in any way disputed at any time,
a court or other trier of fact may modify and reform such provision to
substitute such other terms as are reasonable to protect Employer's legitimate
business interests. If any provision, paragraph, or subparagraph of this
Agreement is adjudged by any court to be void or unenforceable in whole or in
part, such adjudication shall not affect the validity of the remainder of this
Agreement, including any other provision, paragraph, or subparagraph. Each
provision, paragraph, and subparagraph of this Agreement is separable from every
other provision, paragraph, and subparagraph, and constitutes a separate and
distinct covenant.
15. Waiver of Rights. If in one or more instances either party fails
to insist that the other party performs any of the terms of this Agreement, such
failure shall not be construed as waiver by such party of any past, present, or
future right granted under this Agreement and the obligations of both parties
under this Agreement shall continue in full force and effect.
16. Survival. The obligations contained in Sections 7, 8, 9, and 10
shall survive the termination of Employee's employment. In addition, the
termination of employment shall not affect any of the rights or obligations of
either party arising prior to or at the time of the termination of employment,
or which may arise by any event causing the termination of employment.
17. Successors. This Agreement shall be binding upon and shall inure
to the benefit of Employee, and, to the extent applicable, Employee's heirs,
assigns, executors, and personal representative, and upon Employer, its
successors and assigns, including without limitation, any person, partnership,
corporation or any other entity that may acquire all or substantially all of
Employer's assets and business, or with or into which Employer may be
consolidated or merged.
18. Complete Understanding. This Agreement constitutes the complete
understanding between the parties regarding terms and conditions of employment,
all prior representations or agreements having been superseded.
19. Modification. No alteration or modification of any of the
provisions of this Agreement shall be valid unless made in writing and signed by
both parties.
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20. Headings. The headings of sections and paragraphs of this
Agreement are for convenience and identification only and do not limit or
construe the contents of such sections and paragraphs.
21. Governing Law. This Agreement shall be subject to and governed
by the laws of the Commonwealth of Virginia. The parties agree that any cause of
action arising from the terms of this Agreement shall be brought only in the
Circuit Court of the City of Richmond, Virginia. The parties agree that such
court shall be the exclusive and sole venue for the adjudication of any disputes
hereunder.
22. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed in their names as of the date first written above.
XXXXXXXX INDUSTRIES, INC.
By: /s/ Xxxx X. Xxxxxxxxx
---------------------------------
Name: Xxxx X. Xxxxxxxxx
---------------------------
Office: Secretary
-------------------------
XXXXXXXX ADHESIVES, INC.
By: /s/ Xxxx X. Xxxxxxxxx
---------------------------------
Name: Xxxx X. Xxxxxxxxx
---------------------------
Office: Secretary
-------------------------
EMPLOYEE
/s/ Xxxxxxx X. Xxxxxxx
-------------------------------------
Xxxxxxx X. Xxxxxxx
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